First Hearing Reveals Robust Texas Conversation on Medicaid Expansion

Anne Dunkelberg

Last Friday was a double-feature for Capitol watchers and health care fans, but the policy in the spotlight will touch every Texan.

Chairman Pitts of the House Appropriations committee devoted three hours to invited testimony on Medicaid expansion and Texas.  The LBB laid out their estimates of costs, noting that they are working on—but have not yet released—estimates of state-budget savings, increased insurance tax revenues, or Medicaid drug rebate growth Texas would gain.  The LBB assumes lower administrative costs and much lower Medicaid adult enrollment “take-up” than Texas HHSC (LBB predicts only 65 percent of eligible adults enroll, HHSC says 75 percent), but under either model the ratio of federal funds gained to state dollars needed is dramatic in early years, because the federal government pays 100 percent of expansion costs for 3 years.

A strong economic argument for expansion was laid out by former Deputy Comptroller Billy Hamilton, who called it the “greatest fiscal opportunity” for Texas in his 30+ years of public policy work.  TPPF analyst John Davidson spoke in opposition.  Dallas County Judge Clay Jenkins and Harris County Judge Ed Emmett both spoke of the enormous social and fiscal benefits to be gained, emphasizing anticipated benefits from increased access to mental health care for low-income county residents.  Closing out testimony was Bruce Bradford, CEO of the North Dallas Chamber of Commerce, the most recent urban Texas Chamber to join the list in support of Medicaid expansion.

The hearing was punctuated as usual with both juicy factoids and a few breathtaking misstatements.  Here are a few worthy of repeating and/or correction:

  • Vice Chairman Turner pointed out that the LBB estimates of state costs versus federal funds gain for the 2014-2015 budget represented a 20-to-one gain for Texas.  Representative Howard underscored the Hamilton and Associates report finding that in 2014-2015, Texas would see $1.2 billion in state budget GR savings (offsets) if the expansion is rolled out January 2014.
  • The Dallas Morning News has already cited me as the no-fun-at-all person clarifying that federal funds for Medicaid expansion are not like a block grant that, like CHIP, actually reallocates one states’ unspent funds to other states.  To make up for that, I will add here what witnesses at the hearing also noted—and what I wish DMN would also have said—that if we do not act on this opportunity, Texas taxpayers will help pay through federal taxes for the rest of the country to expand Medicaid, will pay continued higher-than-needed local health care taxes, and will lose out on the jobs and economic multiplier effects of netting billions more in federal health care dollars.
  • As DMN noted, the Texas Medical Association’s biennial physician survey has been mis-cited frequently, and this hearing was no exception.  Only about 31 percent of surveyed doctors said they accept ALL new Medicaid patients.  Important difference between this and taking NO new Medicaid patents.  The same survey found that 57 percent of surveyed doctors take at least SOME new Medicaid patients.
  • LBB noted that many low-income Texans would be exempt from any penalty under the ACA’s individual mandate:  those facing premiums in the Health insurance marketplace higher than 8% of family income, as well as families with incomes below the federal income tax filing threshold.
  • No, the ACA did NOT make your employer-sponsored insurance taxable income.  Confusion likely results from the fact that the IRS will be in charge of checking your insurance status.
  • Also misunderstood:  The ACA did NOT add a new 3.8 percent tax on all real estate sales.  The ACA did add a new tax on the roughly 3 percent of “high earner” US households who earn over $200,000 (individual) or $250,000 (couple), applied to investment income of all types.
  • As DMN notes, Rice University Hobby Center researchers Drs. Mike Cline and Steve Murdock have projected that 49% of Texas’ expected ACA coverage gains will come from US citizen adults under 138 percent FPL and kids under 200 percent FPL.  HHSC testified they attribute a lower share to Medicaid, but they also project about 1.5 million adults and kids gain coverage, which is about one-quarter of 6.1 million total uninsured Texans—no matter how you do your arithmetic.  One legislator referred to this potential Medicaid expansion group (1.1 million adults, 400,000 children) as a “tiny population.” More important than what precise fraction of Texas’ uninsured the potential adult Medicaid group comprises is that they are the poorest of our uninsured, and that no alternative is offered for their access to decent affordable care.
  • Another often-confused reference is to the $29 billion maximum dollars budgeted for our 2011 Medicaid 1115 waiver:  over 5 years, if Texas can put up $12 billion in state dollars, we can pull down $17 billion in federal match (total $29 billion, All Funds).
  • Good information about how much coverage and care cost—and how little these Texas families really earn—is so important to weighing the Medicaid expansion question.  One legislator suggested that greater transparency in health care pricing might make insurance coverage affordable for the potential Medicaid expansion adults.  The Kaiser Family Foundation has calculated that a health policy for family of 4 with annual earnings of about $29,400—near the top of the Medicaid expansion income group—would likely cost over $10,100 in 2014 for a parent in his thirties (over a third of gross income), and over $12,100 for a parent in his forties at the same income (over 40 percent of gross income).

Chairman Pitts closed the Medicaid section of the hearing by noting that it was only the beginning of the conversation about covering more Texans under the ACA.

Our next blog post will catch you up on what you may have missed at Friday’s other Medicaid event, where researchers laid out their estimates of the impact of the ACA on coverage at the county level, and the lessons for access to primary health care. 

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